Chris Huhne and Baroness Warsi today attempted to lay the blame for cuts to come at Labour's door. But the level of cuts was their ideological choice.
At their press conference today, Baroness Warsi and Chris Huhne dishonestedly tried to lay the blame for the approaching spending review at Labour’s doors. Later today, Warsi claimed in an email to Conservative party supporters that, “the cuts to come are Labour’s cuts.” The claim is a lie. The cuts to come are the Coalition’s cuts.
The June Budget set out how the Coalition’s deficit reduction plan differed from Labour’s plan which was set out in the March Budget. The Chart below using data from Table 1.1 of the Budget sets out the different approaches.
Chart: Deficit reduction (£bn by 2014-15)
The Bank of England’s Inflation Report set out today that:
“The measures announced in the June Budget are projected to lead to a somewhat faster and larger reduction in the deficit in coming years than projected in the March Budget …
“The direct impact of the fiscal consolidation is likely to have some dampening effects on demand. Some households’ disposable income is likely to be reduced or grow more slowly as a result of the consolidation, and some companies are likely to face lower public sector demand for their goods and services. But those effects may be offset, to some degree, if the consolidation improves investor confidence and reduces the risk of a significant rise in long-term interest rates.”
The Bank’s language clearly indicates that the Budget was a choice. The Coalition put concerns about long-term interest rates ahead of concerns about growth. The fallacy of their argument is that lower growth will lead to more job losses, lower tax receipts, a widening deficit, and the prospect of rises in interest rates anyway.
In their press conference Chris Huhne claimed, “Labour’s last budget planned cuts of £50 billion, so why are they unable or unwilling to admit where they would fall?” Yet the Coalition has – to date – only set out one third of the total cuts that it plans. The Coalition set out £6.2 billion of cuts in May followed by £11 billion of cuts to welfare spending in the June Budget – a mere fraction of the eye watering £52 £83 billion in cuts that are planned by the Coalition this Parliament.
Make no mistake about the Coalition’s tactics. David Cameron’s capitulation this week on school milk, showed how the Government have finally woken up to the pain that will be caused by their ideological approach. The Lib Dems and Tories may be “in this together” but the cuts are theirs and no-one else’s.
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33 Responses to “Coalition lies on Labour’s legacy”
Fat Bloke on Tour
WS
The point needs to be made that Sniffy’s emergency budget contained £12bill of tax cuts including a significant reduction in the Corporation tax rate over 4 years.
Consequently he cut benefit spending to pay for tax cuts. At an individual level this may be a wash for some people but the one big winner will be the banks and the reduction in corporation tax.
Consequently lots of changes for a another dose of corporate welfare. Transparency and tax fairness need to be pushed hard to increase the tax take from the corporate sector. Tax tourists / hypocrites like RM / NI / Sky need to be named and shamed.
Regarding the deficit and some of your earlier comments, there is some validity in the notion that GB / AD should have set out their reduction / rebalancing plan in Nov 2009. However the big negative in all this is the fluid nature of the Treasury’s “conservative” forecasts for the deficit.
They had a bend on them that Beckham would have been proud of, while the £22bill difference between the PBR in Nov 2009 / £178bill and the actual outcome, latest figure if £156bill would mean that the plan would have been out of date before it started.
Consequently better to wait until the bottom had been reached before planning the way out.
Looking at AD’s plan to reduce the deficit by £50bill over 4 years, then the £50bill investment budget and a thorough shake out of the flab caused by lazy civil servants and indolent ministers would mean that it would have been sore but not catastrophic.
The Sniffy slashathon unfortunately is a completely different matter, the upper middle class dog boilers now in charge seem to positively revel in the pain they are going to cause.
Finally give no ground to the Orange book revisionism that the Club Med debt crisis caused the change of heart. They are scraping the barrel to try and cover their embarrassment of being found out.
Apples and oranges, we have North Sea oil, a floating exchange rate and a history of paying off our debts. They had none of these.
In addition the “markets” have woken up to the fact that is the cure kills the patient, then no matter how bad the original disease they are in a worse position.
Fat Bloke on Tour
WS
Any info / update on the structural deficit farrago?
Is the output gap still set to 4%?
Have the “Three Brothers Grimm” stopped laughing?
As I have said before a figure for the structural deficit set at 80% of the actual deficit,
(11.0 total / 8.8% structural / 2.2% cyclical)
after a fall in GDP of 6.4% sets new standards for the craven nature of economic forecasting with the dog boiling economic establishment surrounding our elected government.
It is just another excuse for a re-run of the 1930’s and cut the dole.
Liz McShane
Guido – ..”The Big Lie as only myself and John Redwood seem to be pointing out, is that there is no cut in government spending…”
Tell that to the frontline workers in the public sector who are having to limit/cancel crucial services…..A social worker friend of mine is having a meeting today with her team to discuss exactly this!
ConDemNation.
Tom White
Guido Fawkes lectures on ‘big lies’. What next? The pope on how to combate paedophiles? Tony Blair on the morality of a just war? Gordon Brown on people skills…??
Tom White
*Combat, obviously before anyone gets difficult…